, I 


Transport.  Gen. 


Newspapers  and  Railroads 
as  Factors  in  Southern 
Development 


An  address  before  the 
South  Carolina  State  Press  Association 
Chick  Springs,  South  Carolina 
July  7,  1914 


By 

FAIRFAX  HARRISON 

President,  Southern  Railway  Company 


Digitized  by  the  Internet  Archive 
in  2015 


https://archive.org/details/newspapersrailroOOharr 


NEWSPAPERS  AND  RAILROADS  AS  FACTORS  IN  SOUTH- 
ERN DEVELOPMENT. 

The  most  noteworthy  fact  in  the  present-day  economic  history  of 
the  United  States  is  the  progress  of  the  South.  This  is  demonstrated 
by  official  statistics  which  show  that,  both  in  agriculture  and  in  manu- 
facturing, the  South  is  going  forward  at  a more  rapid  rate  than  any 
other  part  of  the  country. 

During  the  past  twelve  months  there  has  been  a general  falling  off 
in  the  volume  of  business  throughout  the  United  States.  This  has 
been  felt  less  in  the  South  than  elsewhere,  and  such  slacking  up  as  we 
have  experienced  has  not  resulted  from  internal  Southern  conditions, 
but  has  been  the  reflex  effect  of  conditions  in  other  localities.  In  a 
growing  country  like  the  United  States  a return  to  normal  conditions 
is  inevitable  sooner  or  later,  and,  as  the  situation  in  the  South  is  funda- 
mentally sound,  we  may  reasonably  expect  that  when  this  occurs  the 
South  will  benefit  from  it  in  full  measure. 

Iff  we,  as  Southern  people,  are  to  make  the  most  of  the  splendid 
opportunities  thus  opening  up  before  us  it  is  essential  that  we  shall 
all  get  together  and  work  in  harmonious  co-operation  for  Southern 
progress,  and  I know  of  no  agencies  that  can  do  more  in  this  connection 
than  can  the  newspapers  and  the  railroads.  The  interests  of  Southern 
newspapers  and  Southern  railroads  in  the  development  of  our  section 
are  very  closely  interwoven.  Every  increase  in  the  population  of  a 
community  and  every  advance  in  community  prosperity  mean  increased 
circulation  and  advertising  patronage  for  its  newspapers  and  increased 
traffic  for  its  railroads.  This  identity  of  interest,  therefore,  affords  a 
sound  business  basis  for  co-operation  between  the  newspapers  and  the 
railroads  for  community  development,  and,  as  representing  one  of  the 
important  railroad  systems  of  the  South,  I am  glad  to  have  this  oppor- 
tunity to  suggest  some  of  the  lines  along  which  I believe  that  the 
newspapers  and  the  railroads  may  co-operate  most  effectively. 

If  our  efforts  are  to  be  most  successful,  we  must  work  along 
three  lines:  .First,  that  of  aiding  those  already  living  in  the  South 
to  make  a larger  and  more  profitable  use  of  their  opportunities ; second, 
that  of  endeavoring  to  retain  in  the  South  those  who  may  contemplate 


leaving  in  the  hope  of  bettering  their  condition,  and,  third,  that  of  at- 
tracting to  qacli  community  additional  population  of  the  character  that 
may  be  desired  by  the  people  already  living  there.  From  its  organi- 
zation Southern  Railway  Company  has  been  a champion  of  the  South. 
Its  management  has  believed  that  one  of  its  highest  functions  was  that 
of  co-operation  with  the  people  along  its  lines  for  the  highest  develop- 
ment of  the  territory  that  it  serves  for  the  benefit  of  all  alike.  Southern 
Railway  Company  was  a pioneer  in  this  co-operative  work  and  I take 
pride  in  claiming  that  it  is  doing  more  work  of  this  kind  and  doing  it 
more  effectively  than  any  other  railroad  company  in  the  United  States. 
We  have  gradually  broadened  the  scope  of  our  co-operative  efforts 
until  we  now  have  a strong  auxiliary  organization,  co-ordinated  with 
but  not  part  of  our  regular  operating  organization,  and  this  active 
and  militant  force  is  devoted  exclusively  to  co-operating  with  the  South- 
ern people  for  mutual  welfare.  The  largest  unit  of  this  organization 
is  that  engaged  in  promoting  the  larger  production  in  the  South  of 
staple  field  crops,  fruits  and  vegetables,  and  the  building  up  of  all 
branches  of  the  live  stock  industry  through  the  raising  of  more  and 
better  animals.  As  successful  production  depends  largely  upon  profit- 
able selling,  we  have  market  agents  who  devote  their  entire  time  to 
bringing  producers  along  our  lines  into  touch  with  buyers  and  advising 
as  to  the  best  methods  of  packing  and  shipping.  We  are  endeavoring 
to  retain  Southern  people  in  the  South  by  disseminating  among  them 
better  information  as  to  Southern  resources  and  opportunities,  by  seek- 
ing out  individuals  who  contemplate  removing  and  presenting  facts  to 
demonstrate  that  the  opportunities  which  they  have  in  the  South  are 

equal  to  or  superior  to  those  which  they  may  hope  to  find  in  the  lo- 

calities to  which  they  contemplate  going,  and  by  declining  the  allure 
of  immediate  revenue  and  the  competitive  temptation  to  participate 
with  connecting  lines  of  railroads  in  reduced  rates  for  home-seekers 
leaving  the  South.  We  are  endeavoring  to  attract  additional  popu- 
lation and  capital  to  the  South  by  direct  solicitation  of  industries  and 

farm  settlers  and  by  disseminating  information  as  to  the  resources  and 

opportunities  of  the  South  throughout  the  United  States,  Canada,  and 
Europe.  In  this  connection,  I may  mention  that  Southern  Railway 
Company  is  the  only  railroad  company  in  the  United  States  which  has 
an  exhibit  in  the  Anglo-American  Exposition  now  in  progress  in  London, 
this  exhibit  being  devoted  entirely  to  showing  the  resources  of  the 
territory  which  we  serve.  It  is  our  purpose  to  continue  our  work  along 


these  lines  and  constantly  to  endeavor  to  make  it  more  efficient,  and 
I know,  from  past  experience,  that  one  of  the  most  effective  ways  of 
doing  this  is  through  the  co-operation  of  the  press  of  the  South.  It 
is  our  practice,  from  time  to  time,  to  send  to  the  newspapers  information 
which  we  believe  will  be  of  interest  to  their  readers  and,  at  the  same 
time,  may  be  helpful  to  the  entire  South  or  to  particular  localities. 
That  our  view  as  to  the  interest  and  helpfulness  of  the  information 
thus  sent  out  is  shared  by  the  editors  is  demonstrated  by  the  general 
publication  which  our  bulletins  have  received. 

In  addition  to  promoting  the  development  of  the  South  through 
publicity,  the  Southern  press  can  aid  materially  in  this  work  through 
the  influence  of  its  editorial  columns  upon  public  opinion  affecting 
governmental  policies.  Every  community  in  the  South  is  inviting  the 
investment  of  new  capital,  and  it  is  self-evident  that  one  of  the  induce- 
ments to  invest  money  in  any  community  will  be  a knowledge  that  the 
public  opinion  of  that  community  is  such  as  to  conserve  the  capital 
already  invested  there  and  attract  additional  investments  by  something 
more  enduring  than  a personal  welcome.”  In  urging  the  building  up 
of  a public  opinion  that  will  support  such  governmental  policies  as 
will  encourage'  investments,  I have  in  mind,  not  merely  investors  in 
other  parts  of  the  United  States  and  in  Europe,  but  also,  and  more 
particularly,  our  own  Southern  people,  for  the  time  has  now  come 
when,  by  reason  of  the  accumulations  of  her  recent  prosperity,  the 
South  is  able,  in  a greater  degree  than  ever  before,  to  finance  her  own 
enterprises.  As  an  illustration  of  this,  I may  mention  that  Southern 
Railway  Company  recently  arranged  for  an  issue  of  Atlanta  & Charlotte 
Air  Line  Railway  bonds  to  the  amount  of  $20,000,000  to  be  used  in 
completing  the  double-tracking  of  the  line  between  Washington  and 
Atlanta.  The  first  installment  of  these  bonds,  to  the  amount  of 
$5,500,000,  were  sold  to  a syndicate  in  accordance  with  the  practice 
in  such  matters,  but,  believing  that  Southern  bankers  would  be  glad  to 
participate  in  this  financing  and  thus  become  more  directly  interested 
in  one  of  the  great  transportation  systems  of  the  South,  as  I would 
like  every  responsible  man  in  the  South  to  be,  I secured  the  consent 
of  the  syndicate  to  reserve  a limited  amount  of  these  bonds  to  be  offered 
to  Southern  Railway  depository  banks  throughout  the  South.  The 
response  to  this  offer  far  exceeded  my  expectations  and  was  most  grati- 
fying, for  it  was  a new  departure  in  railroad  financing.  Subscriptions 
were  received  footing  up  more  than  twice  the  amount  of  bonds  originally 


3 


set  aside  for  the  purpose  and  exceeding  by  more  than  $100,000  the 
amount  which  I was  finally  able  to  obtain  for  Southern  subscribers. 
The  success  of  this  bond  offering  is  eloquent  testimony  to  the  growing- 
financial  strength  of  the  South.  It  is  an  indication  that  the  South  will 
henceforward,  in  constantly  increasing  measure,  finance  Southern  enter- 
prises and  keep  at  home  money  which  would  otherwise  be  sent  to  other 
localities  for  the  payment  of  interest  and  dividends.  It  should  encourage 
us  to  promote  and  to  support  by  public  opinion  policies  which  will  hasten 
the  conversion  of  the  South  into  a section  of  investment  as  well  as  of 
production. 

In  speaking  of  the  attitude  of  the  press  toward  invested  capital  I 
should  not  he  understood  as  opposing  just  criticism  of  any  improper 
policies  or  unjust  acts  on  the  part  of  corporation  officials  or  others. 
Speaking  for  Southern  Railway  Company,  I court  the  widest  publicity 
for  all  of  its  corporate  acts  and  policies  and  invite  the  freest  discussion 
of  them,  I acknowledge  that  my  official  conduct  is  frequently  stimulated 
and  modified  by  the  comment  of  the  press.  I do  ask,  however,  that 
criticism  shall  at  all  times  have  for  its  basis  complete  knowledge  and 
that,  prior  to  accepting  as  the  truth  any  report  concerning  our  affairs 
that  may  become  current,  enquiry  as  to  it  shall  be  directed  to  me  or 
to  some  other  responsible  officer  of  the  Company. 

Judged  by  the  editorial  comment  in  the  Southern  press  as  well  as 
by  personal  contact  with  Southern  men,  I believe  that  there  is  today 
throughout  the  South  a better  and  more  general  understanding  of  rail- 
road policies  and  the  difficulties  encountered  in  railroad  operation  than 
ever  before.  1 find  that  there  is  a general  disposition  on  the  part  of 
the  public  to  appreciate  that  the  business  practices  of  the  railroads  today 
are  founded,  not  upon  an  arbitrary  system  of  exploitation,  but  upon  the 
necessity  of  securing  and  of  conserving  a revenue  adequate  at  once  to 
carry  the  responsibilities  of  the  past  and  to  permit  progressive  growth 
in  the  future — in  other  words,  that  a railroad,  like  every  other  living 
thing,  has  to  struggle  for  existence  and  make  both  ends  meet.  The 
public  view  of  the  railroad  question  has  undoubtedly  been  clouded  by 
revelations  of  the  exploiting  of  certain  railroads  for  the  purely  selfish 
ends  of  those  who  controlled  them,  but,  when  the  “shouting  and  the 
tumult,”  which  has  been  stirred  by  these  revelations,  and  the  political 
use  made  of  them  dies  away,  the  sober  second  thought  of  our  people 
will,  I am  confident,  differentiate  in  their  criticism  between  the  purely 
dishonest  acts  of  some  individuals  on  the  one  hand  and  on  the  other 


4 


hand  the  survival  in  the  practice  of  other  individuals  of  a conception  of 
the  economic  status  of  a railroad  utterly  and  entirely  different  from 
the  conception  which  a changed  view  of  public  questions  has  established 
as  a rule  of  conduct  today.  It  has  been  demonstrated  to  be  impossible  to 
change  in  a year,  or  in  a few  years,  habits  of  mind  and  habits  of  action 
which  were  once  fostered  by  government  and  applauded  by  public 
opinion  simply  because  there  are  new  leaders  of  public  opinion  with 
radically  different  views.  I belong  to  the  new  school  of  opinion  myself 
and  1 suggest  this  point  merely  that  intelligent  men  who  are  onlookers 
may  appreciate  it  as  I have  appreciated  it  in  my  experience  in  the  heat 
of  the  conflict  of  economic  change.  To  illustrate:  the  State  of  South 
Carolina  has  been  one  of  the  leaders  in  the  movement  now  experienced  - 
in  all  parts  of  the  United  States  for  what  is  called  “state  wide’-’  control 
of  the  sale  and  distribution  of  intoxicating  liquor.  There  is  an  im- 
portant body  of  public  opinion  in  every  State  of  the  United  States 
which  earnestly  contends  that  the  control  of  the  liquor  traffic  is  not 
merely  a policy  of  government  revenue,  not  an  economic  measure,  but 
a moral  issue ; and  yet,  for  all  the  growth  of  this  view,  public  opinion  gen- 
erally has  not  yet  accepted  as  a truth  that  there  is  a moral  degradation 
to  a gentleman  who  takes  a drink  in  his  own  or  a neighbor’s  house.  So 
it  is  with  the  railroad  question : there  are  still  many  respectable  men 
who  believe  in  the  policy  of  monopoly  of  public  utilities  as  a doctrine 
of  efficiency  and  of  economic  strength,  despite  the  clamors  of  the  ad- 
vocates of  a strict  enforcement  of  the  doctrine  of  competition. 

I find  that  the  chief  criticism  of  the  administration  of  the  railroads 
in  the  South  today  is  on  the  adjustment  of  rates.  Many  communities 
in  the  South  have  told  me  that  they  do  not  care  what  the  rates  are,  if 
only  they  are  so  adjusted  that  there  shall  be  no  discrimination  in  favor 
of  one  locality  at  the  expense  of  another.  To  some  earnest  and  intelligent 
men  it  seems  that  it  must  be  an  easy  matter  for  a railroad  manager 
who  is  so  disposed  to  wipe  out  all  the  existing  discriminations : and  I 
find  some  impatience  at  references  to  the  history  of  rate-making  in  the 
South  in  attempted  explanation. 

Most  of  those  to  whom  I am  now  speaking  know  that  railroad 
freight  rates  in  the  South  were  built  on  the  so-called  “basing  point" 
system,  a system  which  started  with  admitted  discriminations  but  justi- 
fied them  by  the  competition,  whether  by  water  or  by  rail,  which  existed 
at  the  favored  points.  There  is  little  doubt  that  the  growth  of  the  basing 
points,  which  this  system  stimulated,  has  been  of  advantage  to  the  entire 


5 


South  by  creating  important  distributing  towns  in  the  interior  of  a 
country  where,  when  the  railroads  were  built,  there  were  few  towns  of 
any  size  away  from  the  seaboard.  It  is  difficult  also  to  believe  that  the 
historical  rate  system  in  the  South,  whatever  was  its  justification,  has 
been  oppressive  to  the  country,  for  we  see  Southern  towns,  still  grow- 
ing and  prospering  with  a vigor  which  excites  the  astonishment  of  all 
observers,  which  for  their  entire  municipal  existence  have  been  in  de-  » 
pendence  for  communication  with  the  rest  of  the  world  upon  these  rates  I 
which  are  now  condemned.  In  the  demands  for  readjustment  one  must 
recognize,  therefore,  an  expectation  of  selfish  advantage  back  of  the 
words  “fair”  and  “just”  which  are  so  eloquently  used  against  the  rail- 
roads, but  I,  for  one,  respect  this  selfishness  as  an  expression  of  a 
virile  community  ambition,  and  I recognize  that  the  railroad  is  going 
to  share  in  the  prosperity  of  a growing  town  and  in  the  multiplication  of 
towns  and,  to  the  extent  of  its  abilities,  should  do  its  part  to  promote  i 
that  prosperity  without  preconceptions  as  to  methods.  Such  being  the 
disposition,  the  problem  of  the  railroad  manager  has  practical  limitations. 
He  has  inherited  a situation  for  which  he  is  no  more  responsible  than 
for  the  shape  of  his  nose,  and  it  is  as  much  part  of  the  railroad  as  his 
nose  is  of  his  face.  The  sudden  application  of  a new  rule  of  absolute 
equality,  the  literal  and  immediate  measure  of  the  principle  that  the 
rate  for  the  short  haul  shall  always  be  1-ess  than  the  rate  for  the  long 
haul,  without  other  compensation,  would  necessarily  bring  a railroad 
face  to  face  with  an  important  reduction  of  its  total  revenue.  If  the 
railroad  is  to  continue  to  live  and  to  grow  after  such  a surgical  opera- 
tion there  must  at  the  same  time  be  a general  readjustment  of  its  rates 
with  advances  in  one  direction  compensating  for  reductions  in  another. 
At  a time  when  there  has  been  an  increase  in  all  of  the  elements  of  its 
operating  costs,  a railroad  finds  a serious  economic  difficulty  in  arbi-  { 
trarily  reducing  its  revenue,  especially  when  it  depends  upon  the  growth 
of  its  income  to  justify  the  provision  of  new  capital  to  enlarge  and 
improve  its  plant  in  compliance  with  public  expectation.  In  this  pos- 
ture of  the  problem,  I,  for  one,  welcome  the  intervention  of  regulating 
authority,  if  only  regulating  authority  recognizes  that  the  exercise  of 
power  carries  with  it  a correlative  assumption  of  responsibility.  I do  not 
say  this  from  any  lack  of  courage  or  from  any  lack  of  confidence  in  our 
ability  to  work  out  the  problem  fairly  on  our  own  responsibility,  but  from 
a realization  of  the  practical  position  of  the  railroads  in  public  opinion 
today.  I trust  that  it  may  prove  easier  for  a government  board  so  to 


6 


adjust  rates  as  to  satisfy  every  one  and  at  the  same  time  produce  a total 
requirement  of  revenue,  than  it  can  be  for  a corporation  subject  to  all  the 
limitations  of  a reputation  for  rapacity,  which  unfortunately  the  rail- 
roads still  have  in  the  minds  of  many  good  people. 

If  the  Interstate  Commerce  Commission  would  prescribe  all  our 
rates,  as  they  have  the  power  to  do,  adjusting  them  on  a basis  to  yield 
[ us  a revenue  sufficient  to  carry  on  our  operations,  make  improvements 
and  pay  a just  hire  to  capital,  as  well  as  to  labor,  I would  rejoice  in 
their  action  in  the  consciousness  that  I was  thus  left  free  to  devote 
our  energies  to  the  improvement  of  our  competitive  service,  with  the 
confidence  that  we  could  give  such  service  as  would  win  and  hold  for 
us  the  respect  and  affection  of  all  the  Southern  country.  But,  whether 
this  consummation  ever  can  be  attained,  I rely  upon  our  action  in  the 
future,  based  as  it  will  be  upon  a desire  at  all  times  to  be  fair,  to  illustrate 
our  motives,  and  to  bring  home  to  the  public  a realization  that  a rail- 
road can  claim  all  the  respect  due  to  integrity  and  patriotism. 

I believe  then  that  we  may  expect  in  the  future  a better  under- 
standing between  the  public  and  the  railroads  than  ever  before,  that  the 
railroads  will  better  appreciate  the  viewpoint  of  the  public,  and  that  the 
public  will  better  understand  their  interest  in  prosperous  and  efficient 
railroads.  I believe,  too,  that,  in  bringing  this  about,  the  press  of  the 
South  will  be  a most  important  factor  and  that  the  newspapers  and  the 
railroads,  working  together,  will  become  ever  more  efficient  factors  in 
the  promotion  of  Southern  prosperity. 


# 


